MCA Defense Lawyers Provide Expert Assistance With Merchant Cash Advance Debt

Merchant cash advances (MCAs) can provide quick access to capital for small businesses. However, the terms of MCA agreements are often predatory, with exorbitant interest rates and aggressive collection tactics. If your business is struggling with MCA debt, specialized legal assistance can help protect your assets and negotiate reasonable repayment terms.

How MCAs Work and Why They Can Be Problematic

A merchant cash advance provides an upfront lump sum to a business in exchange for a percentage of future credit card sales over a set period of time. This differs from a traditional small business loan in several key ways:

• There is no set repayment schedule. The amount due fluctuates based on sales volume.
• Rates and fees are very high, often exceeding 100% APR when calculated as interest.
• MCA agreements allow the funder to access business bank accounts directly to withdraw payments.

While MCAs provide fast access to capital, the downsides often outweigh the temporary cash flow benefits:

• Extremely high effective interest rates – MCA rates typically range from 1.10 to 1.50, meaning for every $1 advanced, $1.10 to $1.50 will be repaid. This translates to over 100% APR.
• Fluctuating payments – Since payments are tied to credit card sales volume, they go up when business is good but can become unmanageable when sales dip.
• Aggressive collection tactics – MCA lenders will freeze or drain bank accounts if they perceive late or under payments. Many report merchants to credit agencies or sue them.

These issues have spurred increased litigation and regulation of the MCA industry. Legal assistance can help business owners claim protections, defend themselves, and seek reasonable resolutions.

MCA Defense Attorneys Help Level the Playing Field

Defending against MCA lenders requires extensive legal knowledge and experience. MCA defense lawyers regularly handle these niche cases, providing services like:

• Reviewing MCA agreements – Identifying unenforceable or illegal provisions in MCA contracts. Many contain elements that violate state laws regarding interest rate caps, confessions of judgement, and other consumer protections.
• Disputing reporting to credit agencies – When MCA lenders report non-payment to credit reporting agencies, it damages the business’s ability to access financing from other sources. Attorneys can dispute inaccurate or unlawful reporting.
• Defending against lawsuits – MCA lenders frequently sue merchants for breaching contracts when sales dip. Defense lawyers handle litigation, argue against unfair contract terms, counter sue for damages, and seek dismissals.
• Negotiating settlements – Experienced lawyers negotiate reasonable repayment terms or settlement amounts with MCA lenders, often significantly reducing the total amount owed.
• Advising on bankruptcy – As a last resort when MCA debts become unmanageable, business bankruptcy filings can discharge or restructure debts for a more affordable payment plan.

Navigating MCA litigation requires financial and legal know-how. An attorney levels the playing field when dealing with aggressive MCA lenders, applying specific defenses and laws to protect merchant interests.

Key Defenses Against Predatory MCA Firms

Merchant cash advance lenders often put form over function – the agreements may seem valid on paper but contain prohibited elements that specialized attorneys can challenge:

Usury Defenses

• Interest rate caps – Most states have usury laws limiting maximum interest charged on loans, usually between 6-25%. MCA rates often exceed 100% APR, violating caps.
• True Lender doctrine – Courts can argue that MCA funders are the true lenders, while brokers simply arrange financing. This makes high rates illegal.

Unconscionable Conduct Defenses

• Unconscionable contract terms – Elements of MCA agreements like wage garnishment, waiving of consumer rights, and required arbitration can be deemed unfair and unenforceable.
• Deceptive practices – Luring merchants into agreements under fraudulent pretenses through misrepresentation violates consumer protection laws.

Other Key Strategies

• Violations of RICO statutes – Class action lawsuits accuse some MCA funders of racketeering and extortion tactics forbidden under the Racketeer Influenced and Corrupt Organizations (RICO) Act.
• Insolvency protections – Special bankruptcy laws protect insolvent firms from creditor collection efforts, allowing orderly repayment plans.

Our Top Attorneys Offer Wise Counsel On MCA Matters

Delancey Street’s hand-picked team of lawyers, financial experts, and debt professionals have decades of combined experience assisting small business owners in difficult situations. We’ve helped hundreds of merchants escape crippling MCA debts and protected countless more from predatory lenders.We offer free consultations to review your unique situation and provide expert perspectives on the best path forward. Our arsenal of legal and financial tools can help rebalance negotiations and achieve resolutions that make repayment manageable. With customized guidance from our compassionate professionals, you don’t have to tackle MCA debt alone.

The First Step is Reaching Out – Schedule a Free Consultation

We encourage any small business owner struggling with an overwhelming merchant cash advance agreement to seek legal counsel promptly. The sooner aggressive collection efforts can be addressed, the more leverage can be applied in the merchant’s favor.To schedule a free consultation and case review with our team of MCA defense experts, visit our website or call us at: